If Tests of Controls Result in Identified Control Deficiencies,how Will

question 9

Multiple Choice

If tests of controls result in identified control deficiencies,how will the auditor assess those deficiencies?

• A)By estimating interest expense based on average interest rates and average debt outstanding.
• B)By comparing current year account balances with prior year account balances.
• C)By determining their severity and the impact on the opinion of internal control effectiveness.
• D)By calculating the long-term debt-to-equity ratio and performing a trend analysis with prior periods.

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Definitions:

Process Costing System

An accounting methodology used in industries where production is continuous, assigning costs to units of product based on the process they go through.

Raw Materials Inventory

The stock of basic materials and components that are required in the manufacturing process before they are transformed into finished goods.

Purchase

The acquisition of goods or services in exchange for money, representing a transaction that increases inventory or assets for a business.

Process Costing System

An accounting method used to assign production costs to units of output, typically used in manufacturing environments where products are indistinguishable from one another.